Payroll takes priority for California ag business

Payroll is one of the most critical components of Foothill Packing’s enterprise resource planning system, which is why the agriculture-worker business customizes its payroll software and had not moved its ERP to the cloud, according to the company’s finance director.

Foothill Packing Inc., Salinas, Calif., provides labor and equipment to growers in California and Arizona for cultivating and harvesting wine grapes, melons, dates and vegetables. The company’s field crews are made up of migrant seasonal workers, governed by myriad federal and state regulations.

“Agricultural payroll is different than anything you have ever encountered,” said Paul H. Powell, director of finance and administration for Foothill Packing. “It is very involved and very complex. We do our own payroll.”

Foothill Packing has 2,000 to 2,500 workers per week, and agricultural worker regulations require that they are paid weekly. Almost all of the workers choose to be paid with a paper check, Powell said.

“We pay on Fridays; no excuses,” he said. “People count on us, and they need their money. They’re not the highest-paid folks in the world. They need to have that check on Friday, and the fact that we deliver and will make sure that it gets delivered carries a lot of weight with the field workers.”

Customizing the payroll software is critical for Foothill, because payroll is the weak link in its ERP software package: Microsoft Dynamics Navision, Powell said. Foothill uses an IT consultant, Fremont, Calif.-based Oztera, to modify the software.

“Payroll drives most of everything that we do,” Powell said. “The standard payroll package that you would get looks at pretty much office people, 8 to 4 and out the door, Monday through Friday, eight hours a day, five days a week, and a little calculation for overtime, but that’s about it.”

With agricultural payroll, the software has to be customized to calculate piece rates, where a worker is paid by crew or by individual for a minimum hourly rate, plus an amount based on production — number of boxes of produce picked, for example.

The payroll program also has to be able to factor in overtime after 10 hours in a day; unemployment; income tax withholding; and workers’ compensation insurance. It has to calculate differences based on the employment contracts with each grower and based on the state the work is done in. And a worker could be in two different states in the same week, Powell said.

As Foothill builds more components into its ERP, including the payroll software, that provides efficiency as the company expands, Powell said. Foothill had eight clerks in 2005 handling payroll for 900 to 1000 workers per week. Today it has 12 payroll clerks, plus two administrative assistants, for 2,000 to 2,500 workers per week.

Powell said that Foothill keeps its ERP on company servers so it can be assured that it will maintain control of the data and the information flow.

“You’re never sure where the cloud ends. What we have in our database system is extremely personal information. Identity theft is a huge concern,” he said. “We can’t afford to have any of that information out.” That includes information on each employee card, especially as the ERP system is built out, that is regulated by federal privacy laws.

Powell said he also doesn’t want the data to be held hostage by a third-party provider for escalating fees or for the company to have to rely on the success of a third-party provider’s business plan and ability to keep up. And with a closed system and backups, the Foothill never has to be concerned about the internet going down.

“We have to pay every week, on Friday. If you don’t, you have a labor violation in the state of California. And that becomes very expensive,” Powell said.

“Farm labor contractors don’t enjoy the highest reputation that there is. They’re often referred to as bottom-feeders, and they mistreat a lot of farm workers,” he said. “The reputation of our company is very important to us, just as important is Dole’s produce label is out in the grocery store.”